The Real Cost of an Unhappy Employee


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A few months ago we posted an infographic that outlined how businesses use employee happiness as a business tool—and last week we talked about the warning signs to look out for that may indicate an employee is unhappy in his or her job. This week, let’s go a step further and analyze how disengaged, unhappy employees impact your company’s bottom line.

First some statistics:

  • 46% of new hires fail within 18 months
  • 89% of the time, when it didn’t work out it was due to attitude, not lack of skill
  • Turnover costs are often estimated to be 100%-300% of the base salary of replaced employee
  • $550 billion is the annual estimated cost of lost productivity due to disengaged employees
  • Companies with the most engaged workers have demonstrated significantly higher productivity, profitability
  • Companies where the majority of employees are disengaged saw their operating income worsen by 32.7% within the same time period
  • Only about 22% of the American workforce is “engaged and thriving”

78% of employees are disengaged. Why?

Well, according to Paul McDonald, senior executive director at the renowned staffing service company Robert Half, employees are disengaged or unhappy at work due to one of the following reasons (surprisingly being poorly compensated is not or the reasons):

  • Lack of recognition
  • Lack of advancement opportunity
  • Poor work-life balance
  • Poor relationship with their manager

How do companies prevent turnover and unhappiness?

  • Improve new hire screening process—check into company culture more than competency. Skills can be built and refined; attitudes are usually set in stone.
  • Emphasize a healthy work/life balance—encourage time off for recharging batteries and be flexible with requests from trusted employees.
  • Frequently recognize employee accomplishments, no matter the scale—69% of employees report that they would work harder if they were better recognized
  • Focus on your employees’ strengths—research has shown that managers who focus on their employees’ strengths can practically eliminate active disengagement and double the average of US workers who are engaged nationwide.



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